Deal Making to the next Level

Posted: Saturday, February 9, 2013 by Dylan Benson in Labels:

Recently I was talking to a friend of mine named Darrell Seale, the Director of International Programs for Fixed Wing Sensor Programs at the private defense contractor Lockheed Martin.  Now what does this have to do with audio?  Well actually, absolutely nothing.  However, this man negotiates multimillion dollar deals for breakfast, and it got me to think, how does deal making like this compare to deal making and negotiation to someone in the entertainment industry?

Courtesy of The Dividend Pig

After Seale received his bachelor’s degree in Industrial Engineering and Aerospace Engineering from Oregon State University, he did a lot of satellite imagery work, and was a program manager as an officer in the US Air Force.  After that, he was negotiating national and international deals for Lockheed Martin.

So what makes these negotiations different from that of someone in the audio field?  Well, Seale deals with defense products (high tech military weaponry) and someone in the audio field will be talking about who gets to record what.  Price is also different.  An extreme case in the audio world would be Jay-Z’s $150 million dollar record deal back in 2008, but it is not uncommon for Lockheed Martin to close a deal worth over three billion dollars.  Seale also informed me that these negotiations could go on for months at a time.

 Sniper Advanced Targeting Pod: Some of what Seale Negotiates.  Courtesy of Lockheed Martin

Either way, negotiation is negotiation.  How does Seale carry them out?  When I asked him how he separates the people from the problem, he said the biggest thing is actually being as transparent as possible.  He said you must keep all personal aspects out, as this is all business.

While it was going to be my next question, he said Lockheed Martin prides itself on integrity.  People have been fired for lack of it.  Dirty tactics and/or tricks are not used.  Everything is in good faith.  So what about if the other party uses dirty tactics?  Well, Lockheed Martin is not the only defense contractor out there.  Lockheed has to make sure it keeps its business.  So they will try to make sure deals work.  However, they have been known to walk away from billion dollar deals to protect the reputation of the company.

When you are negotiating F35 jet fighters and such, objective criteria must be important, right?  Well, the prices of these items and quotes from vendors are easy access for another party to come by.  The US government actually requires Lockheed to go into a negation with open books.  This means the US government wants to make sure that they know what every piece of everything they want buy costs; even down to one screw or rivet.  Seale also mentioned that when dealing with unknowns, he will bring in subject matter experts.  He will also use parametric estimates.  For example: he will say this new price is based off the fact that this technology is twenty percent more complex then the previous technology.

Mutual benefits of the deals depend heavily on Lockheed’s position and authority on the deal.  Sometimes the company will bid a zero percent margin because it will either keep the production facilities running, or establish or continue customer purchases.  Other times, deals are “take it or leave it”.  Seale said it comes down to two things: you have to know what the stance of your company is, and you have to know what the customer wants.

I learned a lot about negotiation from Darrell Seale, and not just about Lockheed Martin.  The numbers and products or services may be different from that of the entertainment industry, but it comes down to the same principle: here is what I have, how much are you willing to pay?  The art of negotiation.